Across the nation each year, thousands of homeowners refinance their mortgage. Know why? With a mortgage refinance you can save more over the life of the loan, bring stability to a changing mortgage payment—and ultimately your budget. You can even refinance as a means of debt consolidation.
When you refinance your mortgage, you’re actually replacing it with a brand new loan. In doing this, expect to go through a mortgage application process similar to what you experienced with your original mortgage. Refinancing is often a sound financial choice that can allow you to meet a variety of needs:
Since a mortgage is a loan secured by a piece of real property, a crucial factor is in the correct value of the property in question. Property value can be determined in a number of ways:
A rate-term refinance has a loan amount that is just enough to repay the balance of the existing mortgage. The purpose of the loan could be either to reduce your interest rate, adjust your loan term, or both. A cash-out refinance, on the other hand, has a loan amount that exceeds the current mortgage balance. The higher loan amount converts some of you home equity into cash proceeds, which you receive at loan closing.
A loan for which you can either receive a large sum of money or have an open line of credit that can be drawn as it is needed, with, typically, low interest rates. Use the equity in your home to make improvements to your home, pay college tuition, unexpected expenses or simply free up some extra cash. Home equity lines of credit (helocs) offer numerous benefits and flexibility to homeowners:
The home equity line of credit is used as you need it and can be paid off at anytime. You can draw on your line of credit from time to time, up to the total amount available. Your monthly payment is based on the amount of your line of credit you have used. You enjoy a lot of flexibility and control over your money